Risk management begins before capital is committed.
Risk cannot be eliminated. It can be identified, measured, limited, monitored, and escalated. The investment process is designed to evaluate downside exposure and liquidity before expected return.
Material risks
The strategies described on this website involve substantial risk. The following categories are material; the definitive offering documents of any vehicle will contain a more complete discussion.
Market risk
Prices of positions and hedges can move adversely, including in ways unrelated to the identified catalyst.
Credit and counterparty risk
Brokers, custodians, trading counterparties, and issuers may fail to perform, delaying or reducing recoveries.
Liquidity risk
Positions may be difficult or costly to exit, particularly under stress or near contractual deadlines.
Financing and leverage risk
Margin requirements, financing costs, and forced liquidation can magnify losses and compel sales at unfavorable prices.
Event and transaction risk
Transactions may break, be delayed, or be amended; votes and redemptions may not proceed as anticipated.
Operational risk
Errors in trading, settlement, reconciliation, valuation, or cash controls can result in loss.
Legal and regulatory risk
Changes in law, regulation, or interpretation can adversely affect strategies, instruments, or the firm itself.
Concentration risk
Correlated catalysts, issuers, or deadlines can cause losses to cluster rather than diversify.
Valuation risk
Estimates of trust values, spreads, and probabilities are judgments and can prove wrong.
Options and derivatives risk
Volatility shifts, skew, path dependency, early exercise, assignment, and model error can produce losses exceeding the amount invested in a position.
Cross-border considerations
Non-U.S. investors and instruments may face additional tax, regulatory, settlement, and currency considerations.
Business continuity and cybersecurity
Key-person events, system failures, and cyber incidents can disrupt operations and cause loss.
The intended control framework
The firm intends to document and apply the following controls. Specific limits and procedures will be formalized in the governing and operating documents of the applicable vehicle.
All investments involve risk, including possible loss of principal. Risk controls may reduce certain risks but cannot eliminate them, and no assurance can be given that any control will operate as intended in all market conditions.